Explanation of ‘Bankers’ Bank’
A bankers’ bank is specific type of bank, which a unit of larger, more established banks create. Bankers’ banks live for the purpose of servicing the charter banks that founded them. While their banking services are not on average open to the public in any fashion, these institutions are designed to support community banks.
Be crushing DOWN ‘Bankers’ Bank’
Bankers’ banks can help community banks to effectively joust with larger banking entities. The first bank of this genre was created in 1975 in Minnesota. There are currently 22 of these existences nationwide that serve over 6,000 community banks in 48 ceremonials.
Bankers’ Bank and Credit Unions
In several ways a bankers’ bank is equivalent to a credit union. Both exist well within the financial uses industry but offer different structures and community benefits than profuse traditional commercial banks.
In a credit union members pool their specie by purchasing shares in the cooperative. These buy-ins allow the credit circle to provide loans, demand deposit accounts, and other financial upshots and services to its members.
Credit unions and banks do offer similar professional cares, such as accepting deposits, lending money and providing members with a stretch of other useful financial products (credit and debit cards, Certificates of Deposit, etc.). At the word-for-word time key differences exist in how both entities make money. The brawniest difference is that banks function to generate profits for their shareholders, while ascription unions operate as not-for-profit organizations designed to serve their fellows. Credit unions will generally use any income generated to fund contemplates and services that will benefit the community and interests of its members (de-facto holders).
Credit unions range from small, volunteer-only operations to mammoth entities with thousands of participants. Corporations and other entities can also breed their own credit unions for their employees and affiliates.
Example of a Bankers’ Bank
One illustration is the aptly named Bankers’ Bank, with its headquarters in Madison, Wisconsin. This asylum is state chartered and previously held the name of Bankers Bank Of Wisconsin until to changing to simply Bankers’ Bank in September 1993. Bankers’ Bank now sells a large variety of products, including secondary mortgages, safekeeping and portfolio accounting, imparting alternatives, federal funds, cash letter processing, municipal cords underwriting, investment trading, and more.
The mission of Bankers’ Bank is “to improve the value of community based financial institutions by delivering the highest supremacy products and services at competitive pricing, while providing a return to shareholders.”
Since Bankers’ Bank is not a retail bank, it not battle with clients for market or charters.